What is a Health Savings Account (HSA)?

• An HSA is a savings account that you use to pay for your routine health care expenses.
• HSA's contain funds that are owned and controlled by you, the account holder.
• HSA savings rollover every year for your health care expenses and/or retirement.
• An HSA is portable , the funds remain with you regardless of employment.

Who is eligible for a federally tax-deferred HSA?

• Individuals under the age of 65 are eligible to contribute to an HSA if they have a qualified health plan.
• For self-only policies , a qualified health plan must have a minimum deductible of $1,000 with a $5,000 cap on the out-of-pocket expenses (indexed annually).
• For family policies , a qualified health plan must have a minimum deductible of $2,000 with a $10,000 cap on out-of-pocket expenses (indexed annually).
• Preventive care services are not subject to the deductible. In addition, coverage for accidents, disability, dental care, vision care, and long-term care is not subject to the deductible.

What can I pay for with my HSA?

• Qualified health care expenses : You can pay for qualified health care expenses on a tax-free basis from your HSA. You can also withdraw funds for COBRA continuation coverage or insurance premiums while unemployed.
• Non-qualified expenses: If you make a withdrawal for non-qualified health care expenses, a penalty of 10% plus ordinary income taxes will be due on the amount used. Non-qualified expenses include such things as elective cosmetic surgery, over-the-counter drugs and travel for the general improvement of your health, just to name a few. The 10% penalty does not apply once you turn 65 years old, become disabled, or upon your death. State rules and regulations can vary.